MEETING SUMMARIES: Legislative Fiscal Plan Working Group

Summaries and video links to all legislative Fiscal Plan Working Group meetings here.

Senate and House leaders have formed the bipartisan Fiscal Plan Working Group to focus on a plan to solve Alaska’s fiscal challenges, including a long term solution for the Permanent Fund Dividend.

Summaries of each meeting will be posted here to keep school districts informed of the working group’s progress and assist in advocacy efforts.


July 30, 2021

Public Testimony was taken from 42 Valley residents at the Mat-Su LIO in Wasilla. Every person testifying was in support of the of a statutory PFD.  Other topics brought up were:

  • Cut government services to balance the state budget;
  • Implement a wage tax on non-residents;
  • Overhaul Medicare and Medicaid;
  • Eliminate legislative per diem.

The remaining public hearings:

  • Saturday, July 31, 1:00pm – Fairbanks LIO or call-in at 844-586-9085
  • Monday, August 2, 6:00pm – Juneau (and all other parts of the state) in the Alaska State Capitol, Room 532 or call in from Anchorage at 563-9085, Juneau at 586-9085, and all other state locations at 844-586-9085

Written testimony may be provided at fiscal.policy@nullakleg.gov

Listen to Gavel Alaska audio of the July 30, 2021 meeting. Time 2:04:30


July 29, 2021

Public Testimony was taken from 27 Anchorage residents at the Anchorage LIO.  Additionally, 4 written comments were received.   A breakdown of the public testimony topics were:

  • 20 – Do cut services by paying a “full” PFD.  Several of these testifiers suggested suspension of the dividend for one or two years would be acceptable to improve the state’s fiscal situation;
  • 9 – In support of a “full” statutory PFD including those who advocated for a “make-up” payment for those years when the “full” dividend was not appropriated;
  • 1 – The legislature needs to work together to solve the fiscal problem;
  • 1 – The solution to the fiscal problem is to cut education funding. 

Of those who were not in favor of cuts to services, the testifiers were predominately from the University of Washington Medical School WWAMI program – a consortium of five states, Washington, Wyoming, Alaska, Montana, and Idaho where students are trained in the medical field.  They were advocating for a more stable source of funding.  Also mentioned were school bond debt reimbursement, education funding, Power Cost Equalization, and community revenue sharing. 

The next public hearing will be for Friday, July 30 at the Mat-Su LIO in Wasilla at 6:00 pm.  It will be live streamed on AKL.tv as well as KTOO Gavel to Gavel

Watch Gavel Alaska video of the July 29, 2021 meeting. Time 1:17:56


July 27, 2021

The Legislative Fiscal Plan Work Group met both in the Anchorage LIO and virtually, presided over by Co-Chair Sen. Lyman Hoffman (D-Bethel). 

Today’s agenda had two presentations: 

Alaska Permanent Fund (PF) CEO Angela Rodell gave a comprehensive overview of the PF.  The following topics were covered:

  • The authority for the establishment of the PF (Alaska Constitution, Article IX, Section 15);
  • The make-up of the PF two account structure (Principal and Earnings Reserve Account [ERA]);
  • Contributions to the PF (Royalty Deposits, Inflation Proofing, and Special Appropriations), with definitions for each;
  • Unaudited values for the PF (Principal $60.1 billion – ERA $21.0 billion);
  • Historical methods of draws on the PF (Income Based Statutory Draw and Value Based Statutory Draw [Percent of Market Value – POMV with definitions for both);
  • Proposed Endowment Structure (elimination of the ERA rolling it into the PF principal with all the investment strategies currently in place for the principal and simplifying the POMV structure.

The second presentation was by Gregory Allen, CEO and Chief Researcher and Steven Center, CFA, Senior Vice President from Callan, the investment advisor of the Permanent Fund Corporation.  The topics covered were:

  • Callan’s capital market projection process;
  • Current economic and capital market environment;
  • Summary of Callan’s 2021 capital market projections;
  • Projected return and risk for the Alaska Permanent Fund Corporation policy portfolio; Performance and valuation update as of March 31, 2021. 

All presentations can be accessed on the legislative BASIS website. 

A series of public hearings have been scheduled for public testimony:

  • Thursday, July 29, 6:00pm – Anchorage LIO in person or call-in at 563-9085
  • Friday, July 30, 6:00pm – Mat-Su LIO, Wasilla or call-in at 844-586-9085
  • Saturday, July 31, 1:00pm – Fairbanks LIO or call-in at 844-586-9085
  • Monday, August 2, 6:00pm – Juneau (and all other parts of the state) in the Alaska State Capitol, Room 532 or call in from Anchorage at 563-9085, Juneau at 586-9085, and all other state locations at 844-586-9085

All public testimony hearings will be live streamed on AKL.tv.

Watch Gavel Alaska video of the July 27, 2021 meeting. Time 1:53:00


July 26, 2021

The Legislative Fiscal Plan Work Group met both in the Anchorage LIO and virtually, presided over by Co-Chair Rep. Jonathan Kreiss-Tomkins. The Work Group heard two presentations on proposals for increasing revenues from Rep. Adam Wool (D- Fairbanks) and Sen. Mike Shower (R-Wasilla). Both presentations contained detailed information and multiple graphs to explain the intricacies of the plans.  The plans are very different. As a result, there is no “deep dive” included in the report for the plans. However, the presentation documents reside in the BASIS section of the legislative website

Rep. Wool’s plan implements an income tax and restructures corporate taxes to capture revenue. Sen. Shower’s plan is based on a state sales tax and uses the South Dakota model. 

The good news is that all the members of the Work Group, conservatives, liberals, and moderates, all seem to understand that it is impossible to “cut spending” as the only way to solve the fiscal gap and new sources of revenue are inevitable.

The next Work Group meeting is scheduled for Tuesday, July 27 at 3:00pm and will be live streamed on AKL.tv

A series of public hearings have been scheduled for public testimony:

  • Thursday, July 29, 6:00pm – Anchorage LIO in person or call-in at 563-9085
  • Friday, July 30, 6:00pm – Mat-Su LIO, Wasilla or call-in at 844-586-9085
  • Saturday, July 31, 1:00pm – Fairbanks LIO or call-in at 844-586-9085
  • Monday, August 2, 6:00pm – Juneau (and all other parts of the state) in the Alaska State Capitol, Room 532 or call in from Anchorage at 563-9085, Juneau at 586-9085, and all other state locations at 844-586-9085

All public testimony hearings will be live streamed on AKL.tv.

The 3rd Special Session was originally scheduled to convene on Monday, August 2, however, the final testimony is scheduled for that day.  No details have been issued as of today if there will be a delay in the Special Session. 

Watch Gavel Alaska video of the July 26, 2021 meeting. Time 2:18:54


July 22, 2021

The Legislative Fiscal Plan Work Group met both in the Anchorage LIO and virtually, presided over by Co-Chair Sen. Lyman Hoffman (D-Bethel). Today’s presentation was on background of the establishment of the Permanent Fund (PF) and the accompanying Permanent Fund Dividend (PFD). Also, there was some comparison of the proposed constitutional amendments related to the PF and the PFD. 

The presentation began with the constitutional mandates:

  • Education – Article 7, Section 1
  • Health – Article 7, Section 4
  • Welfare – Article 7, Section 5

Additionally, the Constitution has a number of “shall” proivisions:

  • Elections/Redistricting/Initiative, Referendum & Recall;
  • Natural Resources Management & Development;
  • Unorganized Boroughs;
  • Local Gove4rnment Agencies;
  • Retirement/Unfunded Mandates.

The Permanent Fund Historical Timeline:

  • 1976 – A Constitutional Amendment was passed establishing the PF;
  • 1980 – the first PFD legislation was enacted, however, payouts of the PFD were ataye3d until litigation challenging the constitutionality of the eligibility formula was settled (Zobel v. Williams); 
  • 1982 – The U.S, Supreme Court ruled the legislation unconstitutional in that the state could not calculate the PFD amount based on length of residency.  The first PFD checks of $1,000 were distributed on June 14, 1982.

The current statutory formula for the PFD is calculated through the following process:

  • Add fund statutory net income from the current + the four previous fiscal years;
  • Multiply by 21%;
  • Divide by 2;
  • Subtract prior year obligations, expenses and PFD program operations;
  • Divide by the number of eligible applicants.

The legislature enacted a change to the calculation, effective July 1, 2021, called the “percent of market value” (POMV) which makes available for appropriation from the PF, the “average market value” of the previous five years.  (Section 2. AS 37.13.140(b))

There have been five resolutions introduced in the 32nd Legislature, 1st Session, proposing amendments to the Alaska State Constitution relating to the PF and appropriations from the PF:

  • HJR 1 – Constitutional Amendment; Permanent Fund, POMV; Earnings – Rep. Kreiss-Tomkins (D-Sitka) – currently in House Finance Committee.
  • HJR 10 – Constitutional Amendment; Permanent Fund; POMV; Dividend – Rep. Chris Tuck (D-Anchorage) – Currently in House Judicial Committee.
  • SJR 1 – Constitutional Amendment; Guarantee Permanent Fund Dividend – Sen. Bill Wielechowski (D-Anchorage) – Currently in Senate Finance Committee.
  • SJR 6/HJR 7 – Constitutional Amendment; Permanent Fund; PFDs – Senate Rules by request of the Governor – Currently in Senate Finance Committee.
  • SJR 18 – Constitutional Amendment; PFD/Resource Ownership Revenue Account – Sen. Natasha Von Imhoff (R-Anchorage) – Currently in Senate State Affairs Committee.

The PF usually generates large surpluses, even after payment of the PFD.  However, the state’s general fund (GF) operates at a substantial deficit.  But the account of both GF and PF usually shows a surplus.  The Earnings Reserve Account (ERA) fund’s ultimate uses were never clearly spelled out at its inception, leaving no consensus over what role the ERA should play in the current and expected budget shortfalls.  Language in each of the above cited Joint Resolutions rolls the ERA into the corpus of the PF.  Additionally, SJR 6 appropriates the Power Cost Endowment (PCE) into the PF corpus. 

The remainder of the discussions centered around two issues:

  1. The effect on the corpus of the PF relative to each of the Joint resolutions;
  2. The effects of rolling the ERA into the PF, which would effectively eliminate the ERA.  Currently it takes a “super-majority” to access the ERA and often creates havoc and “deal-making” to tap the ERA to pay for government operations. 

The next two meetings are scheduled for Monday, July, 26, 3:00 pm and Tuesday, July 27, 3:00 pm.  All meetings are streamed live on AKL.tv.  Additionally, there are a series of on-site opportunities for public input being planned for Anchorage, Mat-Su, and Fairbanks with virtual call-in opportunities for the remainder of the state. 

Watch Gavel Alaska video of the July 22, 2021 meeting. Time 1:12:22


July 20, 2021

The Legislative Fiscal Plan Work Group met both in the Anchorage LIO and virtually, presided over by Co-Chair Rep. Jonathan Kreiss-Tomkins (D-Sitka).  Today’s presentation was on the PERS/TRS contributions by Alaska Department of Revenue Deputy Commissioner Mark Barnhill.  Two data points were provided to the committee:

  • PERS – 10,600 active members / 36,438 retired members
  • TRS – 3,800 active members / 13,243 retired members

The presentation only covered those under the under the defined benefits retirement system and not those under the current defined benefits system.

Deputy Commissioner Barnhill explained the actuarial analysis and recommendations.  The current methodology has a 3 year “lag” for setting the employer contribution rates and a 2 year “lag” for the state assistance rates.  There was considerable discussion by the work group on whether there would be any benefit in compressing the “lag”.  The conclusion was that caution should be used in modifying the methodology when the market was performing well and a long- term view was more preferable. 

The group that manages the retirement accounts is the Alaska Retirement Management Board (AARMB) made up of nine trustees, who in turn, employ actuarial consultants to determine “risk and return” in order to meet retirement obligations and expenses and to manage the fund.  At this point rates are statutorily capped for employers of PERS at 22% and TRS at 12.56%.  The retirement fund is performing very well with the strong position of the stock market and the unfunded liability of the last few years is approaching a fully funded status. 

Deputy Commission Barnhill pointed out that the data presented has just been calculated by the actuarial contractors and has not yet been presented to the ARMB.  This has never been done before but the Department of Revenue is committed to the work of the Legislative Fiscal Plan Work Group.  

The schedule for the Work Group is to work each Tuesday and Thursday with possibly a contingency of a third weekly meeting.  The next meeting is Thursday, July 22, 2:30 pm with a tentative agenda of examining the constitutional amendments introduced by the governor.  All meetings are streamed live on AKL.tv.

Watch Gavel Alaska video of the July 20, 2021 meeting. Time: 1:57:24


July 14, 2021

The Working met presided over by Co-Chair Kreiss-Tomkins with all members present.  A presentation was heard from Alexi Painter, Director of Alaska Finance Division.  Topics covered were:

  • History of Alaska’s Revenue, spending, and budget reserves;
  • Where are we now?  Fiscal summary after vetoes;
  • Possible baselines for the future.

Charts were presented on the following:

  • UGF Revenues Since Statehood, Nominal;
  • UGF Revenue Since Statehood: Adjus;ted for Inflation and Population;
  • UGF Revenue and Oil Prices, FY 11-21
  • UGF Spending and Revenue Since Statehood: Nominal;
  • UGF Spending and Revenue Since Statehood: Real Per Capita;
  • Another View: UGF Revenue and Budget as Percent of Alaskan’s Total Personal Income;
  • UGF Spending and Revenue, FY11-21;
  • UGF Agency Operations Detail. FY11-21;
  • Budget Timing, FY12-22
  • Revenue Projections;
  • Preliminary Short Fiscal Summary: Enacted Budget;
  • Current Law versus Current Policy
  • UGF Statewide Items Comparison: Current Law versus Current Policy;
  • Current Policy Baseline: Post-Veto Budget, Growing with Inflation.

The presentation was intended to establish a baseline for the committee so that all conversation can be directed from the same understanding.  The next committee meeting is tentatively scheduled for July 22.  There was frustration among several members about the slow pace and the approaching special session.  There was general agreement that the committee would likely begin meeting three times each week. 

Watch Gavel Alaska video of the July 14, 2021 meeting. Time: 2:22:22


July 8, 2021

The Legislative Fiscal Plan Working Group held an organizational meeting today presided over by Co-Chair Hoffman.  The Working Group members were introduced and after remarks from Senate President Peter Micciche (R-Soldotna) and House Speaker Louise Stutes (R-Kodiak), each working group member shared their hopes for outcomes that would put the Permanent Fund debate to rest and allow the legislature to concentrate on governing the state.  The mood was upbeat and hopeful.

The committee members are:

Senate Majority

  • Sen. Lyman Hoffman (D-Bethel) – Co-Chair
  • Sen. Shelley Hughes (R-Palmer)

Senate Minority

  • Sen. Scott Kawasaki (D-Fairbanks)
  • Sen. Jesse Kiehl (D-Juneau)

House Majority

  • Rep. Jonathan Kreiss-Tomkins (D-Sitka) – Co- Chair
  • Rep. Calvin Schrage (NA – Anchorage)

House Minority

  • Rep. Kevin McCabe (R-Big Lake)
  • Rep. Ben Carpenter (R-Nikiski)

Alternates

  • Sen. Mike Shower (R-Wasilla)
  • Gray-Jackson (D-Anchorage)
  • Rep Grier Hopkins (D-Fairbanks)
  • Rep. Mike Prax (R-North Pole)

Watch Gavel Alaska video of the July 7, 2021 meeting. Time: 46:12